Mortgage REITs Rebounding Strongly (For Now); AGNC Up 5.3%

By Michael Aneiro

Mortgage real-estate investment trusts are on an upward leg of their high-volatility yo-yo ride Tuesday, with some robust gains following Monday’s steep losses. Markets everywhere are gyrating on the day-to-day sentiment swings regarding the Federal Reserve’s plans to wind down its $85 billion monthly Treasury and mortgage bond-buying program, but perhaps no sector has been so acutely subject to that volatility as mREITs, which are following Treasury prices higher Tuesday after following them lower Monday.

Flagship mREIT American Capital Agency Corp. (AGNC) is wiping out Monday’s losses with a 5.29% gain so far Tuesday, but rallies in some other mREITs haven’t quite matched the magnitudes of their drops over the past trading day or two. CYS Investments (CYS), a big loser yesterday, was recently up a modest 2.0%. Annaly Capital Management (NLY) is up 3.56%. Hatteras Financial Corp (HTS) is up 1.35% and AG Mortgage Investment Trust Inc. (MITT) up 3.94%.

All this volatility is really just all about the Fed, but for some more context this blog has written repeatedly about the mortgage REIT rout that’s accompanied the sharp rise in interest rates that started in May. mREITs were also the focus of my Current Yield column in Barron’s magazine a few weeks ago, when second-quarter earnings reports seemingly promised to offer some better clarity on mREIT book values and suggested mREIT share prices might soon find a floor, but instead the volatility continues.

Amey Stone is Barron’s Income Investing blogger and Current Yield columnist. She was formerly a managing editor at CBS MoneyWatch, MSN Money and AOL DailyFinance. Her responsibilities included overseeing market coverage and personal finance topics. Prior to those roles, she was a senior writer at BusinessWeek where she authored the Street Wise column online and contributed to the magazine’s Inside Wall Street column. Topics covered included economics, corporate finance, Fed policy, municipal bonds, mutual funds and dividend investing. She co-authored King of Capital, a biography of Citigroup Chairman Sandy Weill. She is a graduate of Yale University and Columbia University’s Graduate School of Journalism.